At the request of the Federal Trade Commission, a U.S. district court has frozen the assets of a telemarketing operation that allegedly charged consumers hundreds of dollars based on bogus promises to either provide them with low-interest credit or refund their money. The court also has ordered the illegal conduct to stop while the FTC moves forward with the case.
As part of its continuing crackdown on scams that target consumers in financial distress, the Federal Trade Commission alleged in its complaint that Eric C. Synstad and the Phoenix, Arizona-area company he controls, Premier Nationwide Corporation, falsely promised they would provide refunds if they could not significantly reduce consumers’ debt. The defendants allegedly claimed they would either secure a new, low interest credit card or reduce the interest rates on current credit cards.
The defendants violated both the Federal Trade Commission Act and the Telemarketing Sales Rule, according to the complaint. Changes made to the Rule in 2010 prohibit companies that sell debt relief services over the telephone from charging fees before achieving the promised results.
Cold-calling consumers, the defendants allegedly said they would consolidate debts on a new credit card with an interest rate as low as 9 percent, or work with a consumer’s existing credit card issuers to lower monthly payments and interest rates – in exchange for an up-front fee that typically ranged from $149 to $599. The defendants claimed the fee would quickly be offset by the savings achieved from services they provided, and promised that if they could not significantly reduce consumers’ debt, they would provide full refunds, minus a 20 percent “processing fee,” according to the complaint.
The FTC alleges that in contrast to what the defendants promised, consumers who signed up for the credit card debt consolidation service were merely given a list of banks and told to apply for low-interest credit cards on their own. Those who signed up for the interest rate reduction were told they would have to pay an additional monthly fee to a different company that would work to obtain reduced monthly payments and interest rates. Also, in numerous cases, consumers who sought the promised refund were denied.
Consumers looking for help with credit card debt should be wary of anyone who tells them to stop paying their bills, to pay someone other than their creditors, or to stop talking to their creditors. Consumers should also be careful about paying for financial assistance before they receive it. For more information on dealing with debt, including public service announcements about avoiding debt relief scams, see the Debt Relief Services page of the FTC’s Money Matters website for consumers.
The ban on advance fees under the Telemarketing Sales Rule protects all consumers who have enrolled in a debt relief service since October 27, 2010. For more information about the advance fee ban see: Debt Relief Companies Prohibited From Collecting Advance Fees Under FTC Rule. For guidance to businesses on how to comply with the new Rule, see Debt Relief Services & the Telemarketing Sales Rule: A Guide for Business.
The FTC would like to thank the Arizona Attorney General’s Office and the Better Business Bureau Serving Central, Northern & Western Arizona for their assistance in this case.
The Commission vote authorizing the staff to file the complaint was 3-1, with Commissioner J. Thomas Rosch voting no. The FTC filed the complaint and request for a temporary restraining order in the U.S. District Court for the District of Arizona on January 3, 2012. The next day, the court granted the FTC’s request.
NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendant has actually violated the law.
The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC's online Complaint Assistant or call
1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC's website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.
(FTC File No. 1123164)
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Director, FTCs Northwest Region